The festive shopping season is set to get a little more expensive, as leading appliances and consumer electronics makers are reportedly going to increase prices of appliances like LED TVs, air conditioners, washing machines, and other products by 5 per cent to 8 per cent from October 1.
This will be the industry's third round of price hikes this year.
The electronics makers are set to increase the prices of products, passing on the rise in inputs of soaring metals such as copper, steel, crude derivatives as well as currency exchange volatility due to the conflict in West Asia, according to PTI.
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Key drivers behind price hike
Manufacturers have noted that sustained inflation in inputs such as copper, aluminium, steel, and crude oil derivatives, with higher freight costs, has made further price increases unavoidable, the report said.
Some players in the industry fear the hike could affect festive demand.
{{/usCountry}}Some players in the industry fear the hike could affect festive demand.
{{/usCountry}}On the other hand, the report noted that some companies believe the impact of the price hike would be limited as the dealers and distributors could have already stocked inventory bought at older prices through pre-buying schemes in August and September.
According to sector reports, the festive period, Onam through Dussehra and Diwali, typically contributes 30 to 40 per cent of appliance manufacturers' annual sales.
Category-wise price impact
1- Air Conditioners (ACs) and deep freezers:
The price of air-conditioners will rise 5-8 per cent.
Blue Star Managing Director B Thiagarajan noted that prices of ACs and deep freezers have already increased by 5 to 8 per cent.
LG and Bosch Home Comfort, which owns Hitachi-branded air-conditioners, have also increased AC prices by around 5 per cent, PTI reported, citing sources.
2- Household appliances:
Some companies are also reportedly increasing prices of appliances like washing machines, refrigerators and LED TVs by 3-4 per cent.
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Price hike ahead of festive rush
Companies like Blue Star, Godrej Appliances, Haier, Daikin, and Super Plastronics have already announced or confirmed price hikes ranging from 4-10 per cent across categories.
Meanwhile, Panasonic stated it was still evaluating the situation before coming to a decision in the matter.
What industry leaders said
Kamal Nandi, Business Head and Executive Vice President, Appliances Business, Godrej Enterprises Group, said price hikes of 5 to 7 per cent will happen across categories.
"Price hikes of 5-7 per cent across categories will happen. The timing may differ from brand to brand, with some implementing it from October and others from November, but it has to happen," he said.
"There are pipelines which will last for about a month to one-and-a-half months. Diwali should largely get covered with old-price inventory. Post-Diwali, the new prices will certainly take effect," he added.
Haier India President NS Satish noted that if a price hike was avoided, then the companies would lose money.
"If we avoid taking price hikes, we will lose money. If we increase prices, sales may be slightly impacted, but there is no choice," he said.
He said the company plans to raise prices by around 5 per cent on RAC from October 1 and may undertake further increases after Diwali and again in January if input costs continue to rise.
He also confirmed a price hike of 2-3 per cent in other categories such as LED TVs, washing machines and others.
Satish said Haier plans a cumulative hike of about 15 per cent between now and January.
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Daikin Airconditioning India Chairman and Managing Director Kanwaljeet Jawa emphasised that copper prices have gone up by almost 25-35 per cent.
"Copper prices have gone up by almost 25-35 per cent. The dollar is strengthening and commodity prices continue to rise. Companies are under tremendous pressure," he said.
On consumer demand, he said it remained good for now.
"I don't know what will happen going forward, but everybody is aware of the reality in the marketplace right now. It might affect things in the long term if the situation doesn't improve," he said.
Videotex Director Arjun Bajaj said rising freight costs and supply chain disruptions are expected to create a new pricing benchmark after Diwali.
"Television prices for smaller screen sizes could rise by up to 20 per cent, while larger screen sizes may see increases of up to 10 per cent, depending on screen size," he said.
Super Plastronics Pvt Ltd (SPPL) also plans to increase TV prices by around 7 per cent after October.
According to SPPL Director Avneet Singh Marwah higher prices could impact festive demand as consumers generally expect discounts and offers during this season.
"Global instability and rising costs will definitely have some impact on consumer sentiment," he said.
Panasonic Life Solutions India Head of Product Marketing and Planning (AC category) Abhishek Verma said the company is monitoring market conditions.
"The industry continues to witness unprecedented cost pressures and we are evaluating the situation carefully," he said.